WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF NEPALESE PUBLIC ENTERPRISES: A STUDY ON PUBLIC UTILITY SECTOR

Abstract

The main objective of this study is to investigate the impact of working capital management on the profitability of Nepal Telecom and Nepal Electricity Authority. The descriptive and causal research design was employed in this study. This study covers ten years of data collected from annual reports of sampled organizations. The collected data has been analyzed by using some statistical tools such as mean, standard deviation, correlation analysis, ANOVA and regression analysis. The collected information and the numerical data have been analyzed by using the SPSS 27.0 version to show the data and results clearly. In the regression analysis, The R square, or the coefficient of determination, was 0.987, meaning that the average payment period, inventory conversion period, cash conversion cycle, current ratio, and debt ratio can account for approximately 98.7% of the systematic variation in return on asset (ROA), with the remaining 0.013, or 1.3 percent, coming from the influence of the other factors. The coefficient of determination, or R square, was found to be 0.966. This indicates that the average payment period, inventory conversion period, cash conversion cycle, current ratio, and debt ratio account for approximately 96.6 percent of the systematic variation in return on equity (ROE), with the remaining portion being explained by the influence of other factors. The return on equity and return on assets are positively impacted by the average payment time, albeit this effect is not statistically significant. The return on equity and return on assets are positively and negligibly impacted by the inventory conversion phase. The average collecting duration has a favorable but negligible impact on the return on equity and returns on assets. The return on equity and return on assets are positively impacted by the cash conversion cycle, although this effect is statistically negligible. The return on assets is positively and marginally impacted by the current ratio. On the other hand, the return on equity is significantly impacted negatively by the current ratio. The return on assets and return on equity are negatively and statistically significantly impacted by the debt ratio.